House of Representatives Inquiry into TAFE - May 2013

House of Representatives Inquiry into TAFE - May 2013
House of Representatives
Inquiry into TAFE

May 2013

Contents .......................................................................................................................... 2
Introduction ..................................................................................................................... 3
1. TAFE’s contribution to the development of skills in the Australian economy. .............. 5
2. TAFE’s contribution to the development of opportunities for Australians to improve
themselves and increase their life and employment prospects. ......................................... 8
3. TAFE’s role in the delivery of services and programs to support regions, communities
and disadvantaged individuals to access training and skills and through them a pathway to
employment. .................................................................................................................. 12
4. TAFE and the operation of a competitive training market. ........................................ 17
5. TAFE in those jurisdictions in which State Governments have announced funding
decisions which may impact on their operation and viability........................................... 21
6. Conclusions .............................................................................................................. 25


The LH Martin Institute welcomes this Inquiry into TAFE and appreciates the
opportunity to make a formal submission, addressing in particular the role of
TAFE in meeting the training needs of business and industry, serving
communities and enabling individuals.
There have been numerous inquiries, studies and reports over the past decade
touching on various aspects of VET provision, including the role of TAFE. As
one TAFE director has put it:
        ….[a] concern for those passionate about the implied and implicit value
        of vocational education is the damaging effect of regular policy changes
        which see vocational education and training regularly reshaped,
        redefined and revalued.1
Coming as it does during a period of unparalleled flux and uncertainty for the
VET sector as a whole and for TAFE in particular, this Inquiry can perhaps serve
as a “circuit breaker”, pointing to a broadly acceptable national policy
The thread running through this submission is that TAFE, as the public provider
network, underpins the whole VET system and contributes to the public good
in numerous tangible and intangible ways.
This is not to argue against constructive reform. Even in Victoria, which
adopted a radical outlier model of market reform just a year ago, with
consequential system dislocation2, there will be likely to be positive outcomes
of its reform process. If nothing else, TAFEs have been forced to review every
aspect of their operations, discard marginal offerings, and divest themselves of
poorly utilised assets.

 P.Whitely, Stop short-changing regional areas, Campus Review, 15 April 2013.
 Leesa Wheelahan, Victorian TAFE chaos: a lesson in how not to reform vocational education, The
Conversation, 30 May 2012.

Nor is it to denigrate training provision by private registered training
organisations (RTOs) and seek to insulate TAFE from competition from RTOs,
which can add useful diversity, innovation and choice to the overall system.
However, present moves to contestability of public VET funding present
fundamental challenges for the public TAFE sector which need to recognised
and addressed in appropriate ways.
Not the least of these is that funding agreements with governments have in
the past recognised a particular and distinctive role for TAFE in underpinning
the VET system and have therefore provided some certainty of funding to
maintain TAFE’s training and education capacity.
This may no longer be the case, as has been shown by recent experience in
Victoria, which provides no recognition of a particular role for TAFE and funds
TAFE on the same basis as private RTOs.
While Victoria’s model has been eschewed by other jurisdictions, there is every
possibility that other jurisdictions will, in the face of budgetary pressures,
eventually move to a similar model – that is, cost cutting and budget savings
will be dressed up as “market reform” and “competitive neutrality”, a
possibility recently canvassed by the Australian Workplace Productivity

    The LH Martin Institute at The University of Melbourne undertakes
    research into and analysis of tertiary education and training sector issues,
    it provides policy advice to institutions and organisations and it conducts
    professional development programs for people working in the tertiary

 Australian Workplace Productivity Agency (AWPA), Future Focus: 2013 National Workforce Development
Strategy, pp130-131.

1. TAFE’s contribution to the development of skills in the
       Australian economy.
        Underpinning the national training system
As noted above, Victoria has adopted a radical outlier model of VET reform,
which allows of no distinction between TAFE institutes and private RTOs: they
are funded on essentially the same basis and the Victorian Government has, in
effect, asserted that the publicly owned TAFE institutes have no community
service obligations.4
The more conventional view is that, as public entities, TAFEs are directly agents
of government and therefore of which a government requires broad
adherence to that government’s economic and social policy objectives.
TAFEs also have a scope of course offerings (“comprehensive service
provision”) and a geographical reach – in excess of 400 campuses and centres
throughout Australia – which other providers simply cannot match.
TAFEs serve their communities, local businesses and individuals in myriad

     Perhaps the least visible aspect of the work of TAFEs is how
     they anticipate the knowledge and skills that will be needed
     to support innovation. Just as universities create new
     knowledge for society and train the professions, TAFE’s role
     as an educational and training institution is to anticipate
     how workplaces are changing, and the kind of knowledge
     and skills that will be needed for tomorrow and not just

  Victorian Government, Next Steps for Refocusing Vocational Training Victoria – Supporting a Modern
Workforce (2013), p.34 – see recommendation 18.
  Leesa Wheelahan, TAFE cuts will affect everyone: state governments should think again, The
Conversation, 20 September 2012.

In a fundamental sense, by simply “being in place”, TAFEs offer the opportunity
of broad, accessible and quality vocational education and training to meet
community needs (such as for qualified workers in the community sector,
including health and aged care), individual needs (for example, for upskilling,
reskilling and further education) and business needs (in workforce and
business development).
In a national training system that is becoming increasingly market driven, a
strong TAFE sector acts as a bulwark against market failure. As reported by the
Productivity Commission, if VET was to be left purely to the market, it is likely
that market failures would eventuate, with outcomes being sub-optimal for a
community perspective.6
There is already evidence of market failure to the extent that the National
Skills Standards Council is proposing a more stringent VET provider registration
system, predicated on a perceived diminution in the quality of VET
qualifications being delivered outside the TAFE system and by the “better
private providers”.7
TAFE therefore also provides an assurance of quality provision and sets a
benchmark for the entire VET system.

     Advance TAFE worked closely with relevant authorities
     following the closure of Community College East Gippsland
     in September 2012 to minimise disruption to students.
     Advance took over the running of VET in Schools courses for
     students from across the region to ensure they were not
     disadvantaged in their Year 11 and 12 studies.
                                                              Advance TAFE Annual Report 2012

  Productivity Commission, Vocational Education and Training Workforce, Research
Report, (2011), p.60.
  National Skills Standards Council, Improving vocational education and training – the case for a new system,

It is for these and other reasons enumerated throughout this submission that
TAFE has been described as both the “bedrock of the national TAFE system”8
(AWPA) and a “standard bearer in the delivery of training and education”
This is generally recognised by governments, with the National Agreement for
Skills and Workforce Development providing for:
        …the development and implementation of strategies which enable
        public providers to operate effectively in an environment of greater
        competition, recognising their important function in servicing the
        training needs of industry, regions and local communities, and their role
        that spans high level training and workforce development for industries
        and improved skill and job outcomes for disadvantaged learners and

However, the signatories to this partnership agreement have obviously widely
disparate views as to the meaning of this commitment, with Victoria seemingly
regarding it has having no force, and other jurisdictions, particularly NSW and
Queensland, seeing it as no bar to cutting TAFE funding.

  AWPA, Future focus, pp.15-16.
  Industry and TAFE harmed by VET reforms, Campus Review, 23 July 2012
   COAG, National Partnership Agreement for Skills and Workforce Development (13 April 2012), para 6(d),

2. TAFE’s contribution to the development of opportunities for
        Australians to improve themselves and increase their life and
        employment prospects.
        Enabling individuals
TAFE is popularly (and correctly) associated with the strength of its provision in
technical training – the “T” in both “TAFE” and “VET”, as it has been described.
But from the outset, TAFE has had – and was expected to have – a strong
presence in further education, with its mission to “prepare people for work,
develop the individual and provide second chance education”.11
Some 80% of the activity of TAFE institutes is in areas other than trades
training, such as business, community services and hospitality.
TAFE is able to meet the diverse education and training needs of individuals
and communities through the spectrum of the Australian Qualifications
Framework (AQF), from Level 1 (Certificate I) to Level 7 (Bachelor Degree).
TAFE has always been important pathway to further training and is now an
increasingly important pathway to higher education higher education.
AWPA projects that Industry demand for workers with qualifications,
particularly at higher levels, is growing at a rate of between 3% and 4% a year.
Expanding the stock of qualifications within the workforce is therefore critically
important for future economic growth and productivity.
However, in many ways, we are starting from a low-base. At the same time as
industry demand for skills is rising, survey after survey shows that Australia has
a surprisingly (and alarmingly) high number of people of working age who lack
fundamental language, literacy and numeracy skills. Up to 7 million people
(about 50% of the workforce).12 This is a real brake on the potential to expand
the stock of qualifications and improve productivity (as well as a brake on
current economic activity).

  Leesa Wheelahan, The fractured social settlement in VET in Australia (2012).
  See for example Australian Bureau of Statistics, Programme for the International Assessment of Adult
Competencies, Australia, 2011-2012 (2013).

But the gaining of a post-school qualification is also critically important for the
life opportunities of each individual worker and the lack of such a qualification
is a brake on those opportunities. The workforce participation rate of people
without a post school qualification is markedly less than that of an individual
with a post-school qualification.13

           Labour force participation of persons aged 15–64 with and without non-school
           qualifications, Australia, 2012

                                                              In labour force (%)

             Non-school qualifications          Year 10      Year 11       Year 12      Total

             With qualification                 84.1         86.3          87.2         86.5

             Without qualification              61.6         69.8          76.1         68.9

           Source: AWPA, Future Focus, Table 6.

Research by the National Centre for Vocational Education Research (NCVER),
among others, shows that even the lowest level of qualification is better (in
many cases, much better) than none.14 AWPA suggests that the employment
prospects for people who have left school at Year 10 and who have obtained a
Certificate I or II are 10 percentage points greater than for a Year 10 leaver
without such a qualification.

          Dianne Moore had retired but the financial slowdown caused her
          to rejoin the workforce. She retrained in Aged Care at Advance
          TAFE and has since secured ongoing work as a Personal Care
          “I’m 59 years old but returning to study was a joy and not
          as daunting as I feared.”
                                                    Advance TAFE Annual report 2012

     AWPA, Future Focus, p.70.
     Damian Oliver, Lower level qualifications as a stepping stone for young people, NCVER, 2012

At this lower end of the qualifications scale, TAFE’s scope and reach makes the
possibility of upskilling and reskilling reasonably available to most Australians
and is particularly relevant in regional (and outer urban) communities where
TAFE is likely to be not only the “best show in town” in terms of post-school
provision but the only show in (or near) town.
A recent study shows that TAFE provides a greater of benefits than other
providers in meeting, for example, the needs of socially and economically
disadvantaged people and people with low education and training attainments
(with disadvantage and low attainment often, if not usually, overlapping).15
At the other end of the qualifications scale (AQF Levels 6 to 7), TAFEs have
emerged as increasingly important higher education providers, both in
collaboration with universities and in their own right.
Higher education in TAFE, with its focus on applied learning, usually involving a
strong component of workplace integrated learning, provides students from a
“non-traditional” higher education background a strong student engagement
and adaptable, flexible programs, with multiple entry and exit points. 16

     The University of Canberra and four TAFE institutes - Northern
     Sydney Institute, Metropolitan South Institute of TAFE
     (Brisbane), Holmesglen Institute (Melbourne) and           South
     Western Sydney Institute – are in the formative stages of a
     collaboration project. The University of Ballarat has its Menzies
     Affiliation for joint delivery of TAFE/higher education programs
     with Victorian regional TAFEs.         Queensland’s Gold Coast
     Institute of TAFE and NSW’s North Coast TAFE are teaming up
     with Southern Cross University. Flinders University and South
     Australia TAFE are working together.

  C.Stone, Valuing skills: why vocational training matters (2012).
  See Demand-driven system promises innovation gains, The Australian, 6 March 2013 and University of
Ballarat’s “Menzies Affiliation” – background, The Scan, 9 September 2012.

TAFE’s widely distributed network, together with the pathways that TAFE
institutes provide, creates the possibility of making higher education
accessible to more Australians than ever before – again, particularly for
residents of regional (and outer urban) communities who have not, in the
past, enjoyed locally accessible higher education. Lack of access to higher
education opportunities has meant that many higher education aspirants (such
as young people) have had to relocate or that “immobile” aspirants (such as
older people with family and work commitments) have been largely denied the
opportunity to undertake higher education. Higher education provision is a
seemingly “organic” evolution of TAFEs as integrated tertiary education
providers, the type of integration envisaged in the Bradley Report on Higher

These sorts of initiatives provide TAFEs with a contemporary and
extraordinarily valuable role in training and education, from foundation studies
and technical and trades training through to higher education preparation and
higher education itself.

     D.Bradley et al, Review of Australian Higher Education: Final Report (2008), pp.157-158.

3. TAFE’s role in the delivery of services and programs to support
      regions, communities and disadvantaged individuals to access
      training and skills and through them a pathway to

      Supporting communities
TAFEs contribute to meeting the education and needs of communities and to
the maintenance of the economic, social and cultural fabric of their host

Geographic disadvantage manifests in a number of forms, many of which
overlap and reinforce each other. For example, a concentration of low socio-
economic status families in a particular location will likely have limited social
and cultural resources (as well as economic resources) and low education
attainments, with limited employment opportunities.

With the appreciable gap in education and training attainments between
metropolitan and regional populations, the range of opportunities now
provided by TAFEs can be life changing opportunities.

With its wide geographic distribution, TAFE can and does play a key role in
addressing education disadvantage. TAFEs typically provide support to local
schools to achieve better outcomes, they provide pathways from one
qualification to another, up to and including higher education and they ensure
a reasonable degree of accessibility for persons of limited mobility and/or

GOTAFE has become the leading provider of tertiary education
programs in North East Victoria through a brokerage model, with
universities including Latrobe, Ballarat, Deakin, Monash,
Melbourne and Charles Sturt.
                                              GOTAFE Annual Report 2012

Locally accessible education and training benefits not only individuals but
            supports local businesses, in ensuring the availability of qualified workers from
            within the local population and both skilled, as well as the contribution that
            TAFE can make to innovation and business.

            It also contributes to the viability of regional communities in a number of ways
            beyond education and training.18

            As the population across the whole of Australia ages, a strong youth
            demographic is essential to reinvigorate and regenerate communities. One of
            the challenges associated with this need is that, traditionally, rural and regional
            communities have often seen their young people move away to pursue
            education and job opportunities elsewhere.

             The presence of a strong local provider in the form of a TAFE can counter this
            trend and contribute in other ways to the viability of regional communities.

                                        Key data : Victorian TAFE institutes 2012

Institute  Revenue             Govt Fee ($         Result       Equity Student          Contact     Staff EFT      Campuses (b)
           ($m)                ($m) m)             ($m)        ($m)    enrolments       hours (m)
Advance    26.03               17.54 7.7           -3.7        56.14 10036              1.17        217            11
Angliss    60.4                28.21 30.04         -1.04       105     25850            4.68        311            2
Bendigo    48.65               38     9.34         0.26        88.8    10918            2.93        318            6
Box Hill   150.6               74.2 69.1           7.99        239.4 40467              8.97        822            5
Chisholm   132.96              93.62 36.94         3.54        234.7 37623              10.98       1039           7
GippsTAFE 46.93                34.21 12.46         6.05        88.08 13627              2.16        318            5
Gordon     97.5                83.6 12.81          11.05       160     19891            7.33        584            3
GoTAFE     74.65               58.23 14.66         11.75       109.8 20100              6.33        473            9
Holmesglen 167.5               101.56 60.1         4.62        381.66 54528             12.94       941            4
Kangan     130.4               79.2 48.3           -0.745      230.2 32254              7.9         762            6
NMIT       153.1               85.42 60.18         5.616       323.4 69666              11.646      1000 (a)       13
South West 36.57               28.18 8.45          2.79        65.5    11210            2.3         165            7
Sunraysia 31.63                23.91 6.67          2.26        49.8    6722             0.639       222            4
Wodonga 43.5                   31.22 11.27         9.83        58.93 22844              3.06        293            4
Total      1200.42             777.1 388.02        60.271      2191.41 375736           83.035      7465           86
                 Source: TAFE Institute Annual Reports 2012. Notes: a – estimate b – in addition to formally designated
                    campuses, TAFEs operate study centres and deliver in schools, workplaces and community houses.

              The Productivity Commission has noted that, while generally associated with relatively sparsely populated
            regional areas, urban areas with a high proportion of low socio-economic status households might be similarly
            not well catered for - Vocational education and training workforce (2011), p.64.

TAFE institutes provide tangible economic benefits, in the form of direct
employment and the economic activity they generate, which can be shown by
reference to Victoria.19

Overall, Victoria’s 14 standalone TAFE institutes had revenues in 2012 in excess
of $1.2 billion (of which $338 million – 28% - was generated by fee for service
activity), had net assets of $2.2 billion, employed over 7,500 staff and had
nearly 400,000 student enrolments at 86 campuses across the state.

The 8 regionally based TAFEs generated revenues of over $400 million ($84
million – 21% - in fee for service activity), had net assets of nearly $700 million,
employed 2,800 staff and had student enrolments of nearly $700 million at 49
What is this worth to a regional community?
Apart from the regional development benefits of a locally based tertiary
provider in providing education and training services, a TAFE presence
obviously contributes directly to local economic activity and employment.
The positive impact of the regional economic impact of the presence of a
tertiary provider can be illustrated by economic modelling that showed the
University of Ballarat’s expenditures of $225 million in 2012 over its 5
campuses generated more than half a billion dollars annually and 2,000 jobs
for the regions in which it operates (in addition to the 700 staff it employs

This sort of multiplier effect would suggest that regional TAFEs would generate
hundreds of millions of dollars (up to $600 million) in additional economic
activity for their regional economies, creating several thousands of jobs.

The negative impact of institutional contraction can be illustrated by the
estimated costs to the community of the announced closure of a campus at
Traralgon in Victoria, as a result of the cessation by the Victorian Government
of public funding for “comprehensive service provision”. Baw Baw Shire
Council modelling indicated a loss of 10 jobs in the local education sector could
also see three supporting jobs go and cost the local economy $903,000. If

  Victoria is the reference because the annual reports of Victorian TAFE institutes for 2012 have been
published and are generally available.

GippsTAFE cut 15 jobs, the council said five supporting jobs will be lost at a
cost to the local economy of $1.354 million.20

All the evidence indicates that individuals who study at regional tertiary
institutions are likely to remain in regional areas after they complete
their courses, regardless of whether they decide to engage in further
study or to move directly into employment – the “train in the country
to stay in the country” rule. Moreover, this pattern holds true five years
after course completion and is particularly the case for those who also
attended a primary school in a regional area.

Students who move from regional areas to urban areas in order to undertake a
higher education are unlikely to return, while those who are able to remain in
regional areas while they are studying are likely to stay. Regional provision is
therefore very important in the skilling of regional communities and in the
retention of skilled workers in regional areas.21

Social and cultural benefits are less easily measurable than economic
ones, but this does not diminish their importance and impact.

     The Cultivator Regional Creative Conference convened by
     SuniTAFE staff in October 2012. It brought together 130 design
     experts, students and business and community leaders to
     “inspire creative thinking, find new ways of problem solving and
     build regional capacity through creativity.
                                                                 Sunraysia TAFE Annual Report 2012

TAFEs play a central role in direct community building and social capital
development through, for example:

  Twenty jobs could go in Warragul GippsTAFE funding cuts, Warragul Citizen, 1 June 2012.
  See ACER, Higher education & community benefits: the role of equal provision (2011). While this deals
with the presence of local higher education providers, the analysis is on point, given the strengthening of
pathways between VET and higher education and the growing role of regional TAFEs in higher education

   providing social, cultural and sporting infrastructure,
    hosting events, projects and alliances;
    understanding, addressing and advocating for regional needs; and,
    developing linkages between local, state, and national business and
     other interests.

A campus contraction or closure, through a withdrawal of CSO or other
funding, as has occurred across Victoria, therefore has cascading negative
effects through a community;

    It reduces education and training opportunities across-the-board.
    It results in direct job losses.
    It reduces regional economic activity, results in other job losses and
     undermines viability for at least some businesses.
    It can lead to population loss, as people are forced to relocate to pursue
     education or employment opportunities.

Each effect obviously weakens the sustainability of a community.

4. TAFE and the operation of a competitive training market.

        Creating a broadly level playing field
In a broadly competitive market, as is emerging in the VET sector and is
proposed for the tertiary sector generally, participants should operate under
the same rules.

As the VET system has expanded with the entry of new providers attracted by
access to public funding, it has become clear there are substantial weaknesses
in the regulatory framework. There have been college failures, which have
particularly impacted the international sector, predatory pricing practices and,
associated with such practices, sub-standard delivery, raising serious concerns
about the validity of many qualifications. These have been most clearly
evident in Victoria, with its virtually open market, and have been centred on
the private provider side of the VET sector, not in the public TAFE sector.

As put by TAFE Directors Australia (TDA) in its submission to the Queensland
Skills and Training Taskforce, in the competitive market being created by policy
makers, the expectations of public providers and private providers seeking
public funding should be broadly similar.

Such expectations would include:

      the demonstrated ability to deliver quality assured training, consistent
       with the specifications of particular National Training Packages and
       consistent with the requirements of the Australian Qualifications
       Framework for the level of qualification
      responsiveness to contemporary and emerging skills needs of business
       and industry, the community and individuals
      value for money – that is , delivery of qualifications to the requisite
      capacity – including expertise, facilities and balance sheet – to meet a
       suitable range of industry, community and individual needs.22

  TAFE Directors Australia, Supplementary submission to the Queensland Skills and Training Taskforce,
(2012), pp5-6.

The National Skills Standard Council’s proposals to introduce a new Australian
Vocational Qualifications System setting a higher bar for a training provider to
be awarded the privilege of a license to issue vocational qualifications is an
appropriate measure given the quality problems that plagued the Victorian
system after the introduction its market reform measures.23

     “…we don’t know the proportion of qualifications coming out
     of what you would call high-quality training organisations. I
     think we can assume an employer looking at qualifications
     from a TAFE or some of the better private providers would not
     have a question about the quality of the qualification. The
     question is, what about the others?”
                                  John Dawkins, chair National Skills Standards Council

It is noteworthy that the Victorian government has significantly culled the list
of providers eligible to access public funding from 650 in 2011 to 400 in 2013.24
The Victorian government has also recently published a “statement of
expectations” of private RTOs in receipt of public funding, as a framework to
promote ethical day-to-day conduct and requires such providers to
demonstrate a commitment to serving the public interest.25

With the increasing presence and capability of TAFE in higher education, TAFEs
suffer a number of significant competitive disadvantages as against

 The most evident concerns funding arrangements in higher education where
TAFE institutes are denied access to Commonwealth Supported Places – that is,
a public subsidy towards the cost to an individual of a higher education course
– despite TAFE providers in higher education having to meet the same
registration and teaching standards as universities.

   National Skills Standards Council, Improving vocational education and training – the case for a new
system, 2013.
   Brendan Sheehan, Napthine falls short: TAFE needs more than a bandaid, The Conversation, 14 March
2013. This has been achieved through eligibility conditions, such as financial standing, rather than strictly
quality regulation measures.
   Victorian Government, Statement of Expectations – Principles and obligations for government contracted
training providers in Victoria (2013).

TAFE degrees are therefore provided on a full fee basis, which clearly places
TAFE institutes at a cost disadvantage to universities, which provide publicly
subsidised places.26

And it is clearly unfair to students undertaking unsubsidised higher education
at a TAFE institute, many of whom have had an unconventional pathway to
higher education and whose learning needs are best catered for in a TAFE
setting, as against students undertaking subsidised higher education at a

The continuing denial of a public subsidy for students undertaking higher
education programs in TAFE runs directly contrary to the Bradley Review’s
recommendations, which proposed that “all domestic students accepted into
an eligible, accredited higher education course at a recognised higher
education provider would be entitled to a Commonwealth subsidised place”,
once new regulatory processes were in place (as they have been since the
Tertiary Education Quality and Standards Agency came into being in January
2012). 27

Universities also enjoy a significant competitive advantage in the international
market in having access to streamlined visa processing arrangements which
assumes that all international applicants to a university are low risk
(Assessment Level 1), which reduces student visa eligibility requirements,
particularly in relation to financial standing, demonstrated English language

International applicants to TAFE institutes, for either VET or higher education,
are subject to the risk assessment attaching to applicants from their country of
origin, with eligibility requirements becoming more onerous as the risk level
rises (Assessment Level 5 being the highest).

The public policy justification for treating universities in this preferential way

        Quality is high right across the entire Australian university sector.
        Because there are only 39 of them, the university sector is much easier
         to monitor and regulate.
        The university sector is very stable.

     Despite the availability of VET FEE-HELP, this merely defers payment, and is not a direct subsidy.
     D.Bradley et al, Review of Australian Higher Education: Final Report (2008), pp.157-158.

 Australian taxpayers have a huge financial stake in Australian

Exactly the same considerations apply to the TAFE sector:
    While there have been evident quality issues in the VET as a whole, TAFE
      provision is of a demonstrably high standard.
    While there are more than 5000 VET providers in Australia, there are
      only 60 TAFE institutes
    While a number of private RTOs have collapsed in recent years, TAFEs
      have proved as stable as universities.
    Like universities, TAFEs are public sector entities in which taxpayers have
      a huge financial stake.

The downturn in TAFE international enrolments, which is being compounded
by this discriminatory treatment in respect of visa arrangements, is having a
substantial negative effect on TAFE revenues (and therefore, in the current
environment, negatively affects sustainability). One major TAFE institute
estimates that, over the last 4 years, its international revenue for onshore
delivery has declined by 50%, from $40 million to $20 million a year.

     M.Knight, Strategic Review of The Student Visa Program: Report (2011), p.28-31.

5. TAFE in those jurisdictions in which State Governments have
        announced funding decisions which may impact on their
        operation and viability.

        Funding must be sufficient to sustain TAFE’s
        public good activities

Funding of TAFE must be sufficient to enable TAFE to efficiently meet its
purposes as the public provider.

As noted, Victoria’s model of reform is a radical outlier that allows virtually no
distinctive role for TAFE as against private providers and which therefore funds
public providers on the same basis as private providers.

While other jurisdictions have moved in a more measured and orderly way
towards the introduction of contestability, expressly to avoid the type of
dislocation that has occurred in Victoria, the undoubted challenge that
contestability presents to the TAFE sector has been intensified by funding cuts
in other jurisdictions, notably in New South Wales and Queensland29.

Such cuts add to an alarming long term decline in overall VET funding, relative
to other education sectors and per student.

According to analysis by AWPA, between 2006 and 2010, government real
recurrent expenditure on VET increased by 10% but expenditure per student
annual hour actually decreased by 14% during the same period.

Somewhat more alarmingly, the agency finds that while recurrent funding
since 1999 has increased 31% for public primary schools and 20% for

   The New South Wales government is cutting $80 million and 800 teaching jobs from TAFE, while increasing
student fees by 9.5% and the Queensland government has cut $78.8 million from training, tertiary education
and employment. According to AWPA there have been cuts in 2012-13 all jurisdictions except SA and NT.

secondary schools, and remained steady for the university sector30, it’s fallen
25% for vocational education and training.
     Commonwealth and state government recurrent expenditure, funding per full-time equivalent student
          (schools and higher education) and per annual hour (VET) indexed to 1999 (1999=100)








                          1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
                              Primary government schools      Secondary government schools
                              Vocational education and training          Higher education

                                            Source: AWPA, Future Focus, Table 7.

Obviously such recent funding growth as has occurred has not been sufficient
to keep pace with growth in participation.

                                            Student growth and relative funding

                            2003     2004     2005     2006       2007     2008     2009    2010   2011

                                                  Students          Relative funding

       Source: AWPA, Future Focus, Table 7. NCVER, Australian vocational education and training statistics:
                                           students and courses 2011

     Recent savings measures targeting higher education have changed this equation somewhat.

AWPA’s conclusion is compelling: there is a tipping point at which funding cuts
must compromise the quality of provision.

Arguably, as suggested by the NSSC in proposing a more robust regulatory
framework as outlined in Section 4, that tipping point as already been reached
and “skills reform” is not so much about ensuring efficiency and effectiveness
but shoring up budget bottom lines – that is, cost cutting.

With more providers and students chasing fewer dollars, regulation alone is
not sufficient to ensure quality.

Certainly there are real industry concerns that sustained budget reductions are
now endangering the quality of provision 31 and the meeting of skills needs.32

      “What you’ve got now is the development of quite a disturbing
     trend among the states to cut education funding – but vocational
     education funding in particular. There will be very significant
     short-term consequences for industry because we won’t see the
     flow through of graduates and apprentices in core trades like
     electrical engineering, plumbing and welding that we need for
     our economy.”
                                                                  - AiG CEO Innes Willox

AWPA makes two relevant recommendations:

        A review be undertaken for the VET sector to determine an appropriate
         level of funding for delivery of VET to ensure quality standards are met.
        An increase in public and private funding of at least 3% per annum in
         real terms to meet industry demand for skilled, qualified workers.

     TAFE 'support' two-faced: ACTU, The Australian, 17 May 2012.
     Evans threatens to block education reward funding, Australian Financial Review, 17 September 2012.

In its response to the Final Report of the Queensland Skills and Training
Taskforce, the Queensland Government acknowledged there are higher costs
associated with government service provision which need to be identified and
funded through an agreed base funding and service arrangement.33
This is typically the case, with the published plans of the NSW34 and South
Australian35 Governments making similar acknowledgements. Only in Victoria
is there no such acknowledgement, even though there was a recommendation
to that effect by the Victorian Government’s own TAFE Reform Panel.36

Nevertheless the level of support provided by each of the jurisdictions is
somewhat moot, being impacted by a range of other funding factors, including
budget “savings” and highly variable funding rates. Australia’s “national”
training system comprises eight, often quite different, sub-systems.

This has led to calls for a Commonwealth “takeover” of all or some of the TAFE

     “[VET] is a national endeavour and it would better if there were
     a single layer of government…It isn’t sensible to continue to split
     it in the way we do. We are in a very counter-productive
     situation that just increases regulation. It is difficult to get the
     sort of strategic direction that makes sense for tertiary
                                       - Margaret Gardner, Vice-Chancellor, RMIT University

   Government response to the Queensland Skills and Training Taskforce final report (2012), p.12.
   Smart and skilled website.
   TAFE SA and Skills for All: building on strength.
   TAFE Reform Panel, A strong and sustainable Victorian TAFE sector (2012), p.47.
   Call for feds to take over VET, The Australian, 30 May 2012. Former Queensland premier Anna Bligh
countenanced a rationalisation of national education and training arrangements, which would see States
responsible for schools education and the Commonwealth responsible for post-school education and training -
Critical Reflections on Australian Public Policy: Selected Essays (2009), p.28.

6. Conclusions

           A new national partnership

There is broad agreement about the need to increase the stock of skills and
knowledge in Australia, for both economic and social purposes. Governments
have affirmed through the Council of Australian governments the central role
of the VET system in meeting this need and have equally acknowledged the
underpinning role of TAFE in the VET system.
The National Partnership Agreement entered into at the COAG meeting of 13
April 2012 was intended to ensure accessibility and equity, transparency,
quality, responsiveness and efficiency of the VET system. It also committed
governments to “the development and implementation of strategies which
enable public providers to operate effectively in an environment of greater
competition.” The agreement set out the respective responsibilities of the
various jurisdictions - Commonwealth, State and Territory – and areas of
shared responsibility.
However, a little after a year since its execution, the partnership has
apparently broken down in key respects, principally to do with overall VET
funding and around maintaining the capacity of TAFE, as evidenced by the
impasse between the Commonwealth and several States over incentive
Over the past year, the long run decline in relative VET funding identified by
AWPA has been exacerbated by funding cuts in most jurisdictions, which have
particularly impacted TAFE.39 As put by the chief executive of the Australian
Industry Group, VET funding has become an increasingly a discretionary budget
item - a source of budget savings.40
There is merit in a review of VET funding as proposed by AWPA and that it
specifically encompass a “TAFE base funding review” in order to establish the

     VET hit by funds crossfire, The Australian, 1 May 2013.

   While VET funding overall has increased in Victoria, there have nevertheless been swingeing cuts to TAFE
   The NSW Government has recently announced that it will fund its commitments under the National School
Improvement Plan, in part, by further changes to TAFE funding - NSW signs up to Gonski reforms, The Age, 23
April 2013.

minimum funding required to sustain the public provider network in its role as
a comprehensive service provider.
The outcomes of such a review could form the basis of a new National
Partnership Agreement on Skills, in much the same way as the Gonski Review
established the basis for the proposed National School Improvement Plan and
the Bradley Report established the basis for higher education funding reform.

Such an agreement would need provide for maintenance of overall effort –
that is, at the very least, current funding levels per student contact would need
to be maintained, which would require increases in funding in line with growth
in participation.

The agreement would formally recognise role of TAFE as a comprehensive
service provider and require, as a condition of funding, for appropriately
maintaining this role through funding separate to generally contestable

Consideration needs to be given to the efficacy of current national
arrangements. While a transfer of responsibilities for post-secondary
education and training to the Commonwealth would seem the neatest and
optimal outcome, it seems not to be a practical option for the immediate

AWPA’s predecessor, Skills Australia, proposed, instead, a clear differentiation
of government roles premised on:
        the Australian Government driving coherence of national strategy,
         policy, regulation and standards;
        the key focus of state and territory governments residing in service
         delivery—streamlining for consistency; comprehensibility and ease of
         access; maximising of service impact; and providing seamless support for
         clients and users.41
The current National Partnership Agreement has failed to create the clarity,
certainty and consistency necessary for effective national arrangements and a
new agreement needs to focus on establishing such arrangements.
With the emergence of many TAFE institutes as truly multi-sector providers,
with growing delivery in higher education as well as VET, current funding and

     Skills Australia, Skills for prosperity – a roadmap for VET (2011), p.160.

regulatory frameworks serve to constrain TAFE’s multi-sector operations and
need to be revised to remove such constraints.
In particular, the withholding of a Commonwealth tuition subsidy from
students undertaking higher education in TAFE cannot be justified on either
policy or equity grounds.
Likewise, denying TAFE institutes access to streamlined international student
visa arrangements cannot be justified given that TAFE institutes share more or
less those characteristics of universities which provide the rationale for
granting the streamlined arrangements to universities.

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